Business Law: the Becker v. Pettkus Case

Introduction

Family law litigations have exposed the strengths and weaknesses of various judicial systems in society. Over the decades, family matters regarding business have taken surprising turns, owing to the judgments made by the court. Litigated in 1980, the Pettkus v. Becker matter is one of the interesting family law issues that questioned the efficiency of the Canadian judicial system. The plaintiff, Rosa Becker, and the defendant, Lothar Pettkus, live together for an extended period as husband and wife, although they are not officially married. The couple endeavored in business engagements that saw them expand by acquiring more assets and making profits.

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However, the collapse of the relationship between Pettkus and Becker implied that the ownership of the business property would rest on Pettkus since the property was titled in his name as the sole account holder. After acknowledging the common-law relationship that existed between the plaintiff and the defendant, the court made a ruling based on the joint efforts and constructive trust existing between the former couple. However, the aftermath of the ruling raised issues regarding the fairness of the justice system as Becker pointed it out as the reason for committing suicide. Therefore, this paper describes the occurrences of Becker v. Pettkus matter through the perspective of the litigation process. Additionally, the paper will identify the weaknesses showcased by the adopted judicial process that was contested by Becker and Petkus. Further, identifying the different kinds of judgment that would have created a satisfying result will form the latter part of this paper.

Becker v. Pettkus Case via the Lens of the Litigation Process

The litigation process entails various courses of action that lead to judgment. The Becker v. Pettkus (1980) 2 S.C.R. 834 matter covered the key processes that are involved in litigation, including pleadings, discovery, trial, and appeal. The pleadings phase required the contestants, Becker and Pettkus, to record their versions of the issues that led to the prevailing dispute. The discovery step entails the collection of crucial information from both the plaintiff and the defendant or third parties to foster an in-depth comprehension of the facts that cause the dispute (Duplessis, O’Byrne, King, Adams, & Enman, 2016). Further, the trial entails the provision of evidence in line with the claims or defenses made by the parties in dispute. In the context of the case, dissatisfaction with the judgment to grant the plaintiff 50% of the property influenced Pettkus to appeal. The appeal presented to a higher court called for a review of the ruling realized by the proceedings of a trial chamber.

Pleadings

The pleadings phase of the litigation process concerning the Becker v. Pettkus matter saw the Supreme Court of Canada open its files in 1980. The court took note of the facts associated with the claims and defenses made by the disputing parties. In 1954, Mr. Pettkus and Miss Becker immigrated to Canada from central Europe. The following year, the two met in Montreal before they started living together. Becker suggested they should get married. However, Pettkus saw the question of marriage as unnecessary. Becker pleaded that Pettkus introduced her as his wife and even went to the extent of including her name in income tax documents. Therefore, the plaintiff underlined the existence of a common-law relationship between her and the defendant, a claim acknowledged by the court (Duplessis et al., 2016).

Both parties found employment opportunities that saw Pettkus and Becker earn a weekly income of $75 and $67, respectively. Initially, both had acquired minimum incomes. However, their union saw Becker earn $67 every week from a mere $28 earned within the same period. Thus, the defendant argued that he played a considerable role in fostering the financial growth of the plaintiff even before setting a beekeeping business that turned out to be successful.

In response, the plaintiff pleaded that between 1955 and 1960, Pettkus saved all his income earned from repairing and restoring motor vehicles while she (Becker) took care of living expenses such as paying rent besides buying food and clothing. As such, Becker pleaded that the defendant enriched himself unjustly, despite earning a stable income in the motor vehicle services industry. As a counterclaim, Pettkus emphasized the absence of an agreement regarding the sharing of money or assets between him and Becker. Further, the deposits made to the account bearing Pettkus’ details did not represent a joint saving account. Therefore, the accused defended his position for not agreeing to create a joint account to save the income the two parties realized through their separate employment engagements.

The plaintiff underlined that one of the few moments Pettkus accepted to share expenses entailed their trip to Montreal (in June 1960) when they were in search of suitable land to establish a beekeeping venture. However, after their return to Montreal, in the autumn of 1960, Becker resumed her “role” of paying for the entire living expenses incurred by the couple. The hospitalization of Becker in April 1961 saw another instance where Pettkus made payments for living expenses.

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Petkus used $5,000 from the bank account to facilitate the acquisition of the first beekeeping farm situated at Franklin Center, Quebec. In this respect, the defendant placed a claim that the money used to acquire the piece of land to keep bees for commercial purposes came from his savings deposited in an account bearing his name. Nonetheless, Becker provided finance from his insurance cheques she received due to unemployment to cater for expenses, as well as reparation of the newly acquired farmhouse. The plaintiff also injected funds from the income earned as a babysitter to enhance the farmhouse structures.

Discovery

After arriving from central Europe as immigrants, the court discovered that the parties settled together, despite having not married officially (Duplessis et al., 2016). Therefore, a customary law relationship existed between the two contesting parties for a period not exceeding 19 years. In this regard, a consideration of their relationship would form a crucial part in determining the ruling made by the Supreme Court of Canada.

The Canadian legal chamber also discovered that Mr. Pettkus enriched himself unfairly amid the existence of a constructive trust between him and Becker. The bank account going by Pettkus’ name was used to save earnings realized by the holder as his spouse accounted for paying the entire living expenses. By 1960, Pettkus had accumulated $12,000 in his bank account after living a life characterized by stinginess, especially to his wife, Becker.

The court also understood that the $5,000 used to purchase the first beekeeping farm came from the bank account entitled to Petkus. However, Becker provided the finances required to cater for part of the reparation of the first farmhouse that required a new floor and roof. As such, Pettkus managed the financial aspects of their first business solely by making payments and receipts through the account going by his name. In the early 1970s, the Franklin Center farmhouse sourced a contribution of $1,300 to facilitate the acquisition of a second property at Hawkesbury, Ontario, besides topping it up with money from Pettkus’ savings account. Notably, Pettkus used his name as the title of the two properties.

However, as earlier mentioned, after the deterioration of the relationship in 1972, Becker was given forty beehives, representing less than 10% of the value of assets held by the beekeeping business. The plaintiff also received $3,000 and a car when leaving the defendant for the first time. However, after getting back together in January 1993, Becker returned the cash. Besides the cash being less by $1,100, the hives also did not have the bees. Moreover, in 1974, both Mr. Pettkus and Miss Becker moved into a house they had constructed at the Hawkesbury property. The finances for allocation towards the construction costs came from the beekeeping venture. Becker made personal contributions to finance the procurement of construction materials.

Trial

As the matter proceeded to the trial phase, the judge, Chartrand, made an opinion that Miss Becker offered contributions to cater for living expenses, acquire property, and run the beekeeping business out of the free will. As such, the contributions towards business were meant to benefit Mr. Pettkus, as a member of a joint household. In this regard, the judge disregarded the possibility of an existing trust between the plaintiff and the defendant. Moreover, the trial judge disregarded the unjust enrichment claims made by the plaintiff (Duplessis et al., 2016). Through Chartrand, the court made a ruling that Miss Becker should receive an award of forty beehives without bees. Further, it ordered Mr. Pettkus to release $1,500 to Miss Becker as a representation of the earnings realized between 1973 and 1974 from the forty beehives.

Appeal

Because of dissatisfaction with the ruling made by the trial judge, Mr. Pettkus appealed at the Appeal Court of Ontario. In the plaintiff’s favor, the Court of Appeal varied with the judgment made during the trial of the Becker v. Pettkus matter. Interestingly, during the appeal proceedings, the judges underlined that the trial moderator failed to apply the principles of unjust enrichment effectively in the case involving Mr. Pettkus and Miss Becker. The need to introduce the aspects of ‘resulting trust’ and ‘constructive trust’ prompted the Court of Appeal to dismiss the judgment made by the highest court of Ontario. As such, the petition chamber of Ontario diverted from the sentence issued during the hearing by making a decision that would see Miss Becker receive an honor of a 50% share of the property that belonged to Mr. Pettkus, as well as the bee-rearing venture.

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Weaknesses of the Justice System Displayed in the Becker v. Pettkus Litigation Process

The litigation process adopted for the judgment of the Becker v. Pettkus matter demonstrated various limitations that fairly undermined the dispensation of justice. Notably, the ruling of the testing chamber that required the presentation of 40 apiaries that excluded bees and an amount of roughly $2000 as the income realized from the business for two years demonstrated a weak point. It disregarded the resulting trust and constructive conviction concepts required to influence the decision regarding the sharing of the property and business acquired through joint efforts (Duplessis et al., 2016). Further, the absence of a basis for distinction barred the trial judge from determining the equivalence of Miss Becker’s contribution towards the acquisition of property and the creation of a beekeeping business. The mentioned weaknesses contributed to the variance of the Ontario Court of Appeal with the one made by the trial judge. Moreover, the failure to award Miss Becker a one-half proportion of the property and business that led to her committing suicide denotes another weakness of the litigation process, especially in ensuring the implementation of court judgments.

The Ineffective Application of the Unjust Enrichment Concept

The Becker v. Pettkus litigation failed to apply comprehensively the equitable rules of unjust enrichment. The concept of unjust enrichment occurs in scenarios where party X is enriched unjustly in a way that deprives party Y of his or her rights without a valid legal basis. In most cases of unjust enrichment, the property legally entitled to party X accumulates in value through the unaccounted efforts of party Y (Duplessis et al., 2016). In this regard, the court should base its judgment on the fact that Party Y qualifies for a beneficial interest in the property.

However, the decision realized by the trial judge failed to acknowledge the beneficial interest in the property required to be granted to Miss Becker, despite its legal ownership being entitled to Mr. Pettkus. Essentially, the existence of a resulting trust ensured that both parties either directly or indirectly contributed to the acquisition of the two land properties situated at Franklin Center and Hawkesbury. The court discovered that by catering for living expenses and allowing Mr. Pettkus to save his earnings in a bank account, Miss Becker indirectly influenced the acquisition of the property entitled legally to the former. Further, Miss Becker contributed indirectly to the growth of the beekeeping venture by participating physically in the maintenance of the farmhouse at Franklin Center. The plaintiff also made her contributions gained from income-generating activities such as babysitting, as well as money acquired through unemployment insurance. Thus, the joint efforts of the plaintiff and defendant in the acquisition of property imply that they both showed their dedication out of the resulting trust between them (Duplessis et al., 2016).

As such, the justice system failed to prove the prevalence of a resulting trust connected to the efforts of both Miss Becker and Mr. Pettkus. Importantly, the principle of common intention guides the identification of a resulting trust in the shared efforts of spouses (Duplessis et al., 2016). As such, the trial judge perceived it difficult to validate the expressions of Miss Becker that she acted in a common intention to influence the growth of the matrimonial relationship between her and Mr. Pettkus.

The question of whether or not one spouse should benefit from the contributions they make towards the generation of wealth legally vested in the name of the other partner arises. Thus, the common-law relationship between Mr. Pettkus and Miss Becker that spanned 19 years suggests the existence of resulting trust. The legal processes covering the case should have taken note of the resulting trust emanating from the conjugal relationship between the disputing parties. In this respect, Miss Becker deserved a proportion of acquired property, although it was legally entitled to Mr. Becker due to the common intention held by the couple.

Therefore, the ruling made by the trial judge failed to consider the concept of unjust enrichment in awarding Miss Becker a share of the property and business she contributed to acquire and maintain before the deterioration of her 19-year-old common-law relationship with Mr. Pettkus (Duplessis et al., 2016). The trial judge should have considered the common intention that facilitated the acquisition of the Franklin Center property beside Miss Becker jointly working with Mr. Pettkus at the farmhouse, as well as in financing the procurement of construction materials for building a house on the Hawkesbury property.

Constructive Trust Omission in the Trial

A stronger claim regarding Becker v. Pettku’s case required reinforcement of the claims based on the principle of unjust enrichment. For this reason, the trial phase of the litigation process should have integrated the concept of a constructive trust to guide the decision regarding the sharing of matrimonial property. In this regard, it would be justified to claim that the legal process lacked the flexibility to accommodate the relevant principles of equity, thereby not giving room for the case involving unjust enrichment to take its due course.

Based on constructive trust, unjust enrichment takes place by denoting three important conditions that include an enhancement, equivalent dispossession, and nonexistence of any dialectic basis for the fortification 9. Indeed, Becker’s actions while in a matrimonial relationship with Mr. Pettkus led to the enhancement of the latter as denoted by the accumulated property and beekeeping venture. Further, Mr. Pettkus profited from unpaid labor provided by Miss Becker for 19 years, thus depriving her of the interest in the property and business. Notably, the court did was not presented with any documents denoting that Miss Becker offered her labor gratuitously. Moreover, the failure to consider the common-law relationship that previously existed between the parties in dispute implied that the trial judge ignored the interests of the plaintiff as evidenced by the joint effort with the defendant lasting for over 14 years. As such, the Ontario Court of Appeal based its judgment on the fulfillment of constructive trust requirements. The consideration of the requirements implies that the Becker v. Pettkus matter entailed a case of unjust enrichment occurring in a matrimonial relationship. Thus, the varied judgment made by the Court of Appeal sought to cover the weaknesses of the litigation process that led to the trial judge.

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Poor Follow-up

The avoidance tactics employed by Pettkus through his lawyer prevented Miss. Becker from receiving one-half payout of her property and business share. As such, the stakeholders in the Canadian justice system, including lawyers, frustrated the equitable dispensation of justice as Miss. Becker noted it as the reason for her to commit suicide in 1986. The justice system failed to incorporate the common-law relationships in solving disputes that required the sharing of property between spouses.

Alternative Dispute Resolution

Besides resolving the issue through the Canadian judicial system, parties in dispute could consider employing alternative dispute resolution (ADR) strategies such as arbitration and mediation (Duplessis et al., 2016). In 1973, the acquisition of a vacant property at Hawkesbury, Ontario, saw the parties source $1,300 earned from the farmhouse, as well as money from the savings Pettkus’ bank account. Therefore, the court ought to have considered the ADR approach based on the joint efforts that facilitated the creation of profits from the Franklin Center farmhouse since both parties labored to see the business grow. However, the court also considered the name of the second property purchased since it was entitled to Pettkus after finalizing the purchase. Deterioration of their relationship saw Becker leave Pettkus in 1972 for three months. When leaving, the court noted that the defendant threw $3,000 to the plaintiff for her to take along with 40 beehives and a 1966 Volkswagen. The beehives given to Becker by Pettkus could not sum up to a 10% share of the assets from the beekeeping business.

In January 1973, Becker returned to live with Pettkus after the latter made efforts to rekindle the failing relationship. On return, the court understood that the couple made an agreement to open a joint account for the sustenance of their household expenses besides Becker receiving $500 annually as long as she lived with Pettkkus. She also returned the car and the 40 beehives devoid of bees.

However, in October 1974, after alleged mistreatment and abuse, Becker exited from her relationship with Pettkus permanently. She left with the car along with $2,600 from the farmhouse revenues. The need for the equitable share of the property that was gained through the joint efforts of both Mr. Pettkus and Miss Becker when they were in a common-law relationship was strategic. It acted as the main pleading underlined by the plaintiff in the family matter that influenced family and corporate laws.

Hence, from the above scenario, the ADR approach would have led to satisfactory results. For instance, arbitration is one of the ADR approaches that would have facilitated the realization of a binding agreement between Becker and Pettkus (Duplessis et al., 2016). Arbitration would have provided a chance for a third party to hear the claims and defenses of both parties regarding the sharing of the property and businesses gained through the joint efforts of the disputing parties. As such, the arbitrator could have taken the common-law relationship between Becker and Pettkus as à crucial determinant of the decision arrived to share the disputed property and business.

Further, an informal trial would have created a new perspective towards understanding the existence of a constructive trust between the parties during their relationship that had spanned nearly 20 years. However, the informal nature of arbitration would have barred the realization of fairness, owing to non-collaborative actions portrayed by Mr. Pettkus (Duplessis et al., 2016). As such, it would be easier for Mr. Pettkus to interfere with the binding or non-binding agreement facilitated by the arbitrator. Notably, the defendant compromised the formal legal process in Canada by inhibiting the payout to the plaintiff through his lawyer.

Conclusion

The Becker v. Pettkus case process is one of the most interesting litigations that have influenced the approach to family law and corporate law. The judgment made during the trial showed considerable inconsistencies in applying the principles of unjust enrichment. Upon appeal, the constructive trust concept realized integration thereby denoting the existence of unjust enrichment. Moreover, the litigation process also depicted limitations as the Court failed to facilitate the one-half payout to the plaintiff.

Reference

Duplessis, D., O’Byrne, S., King, P., Adams, L., & Enman, S. (2016). Canadian business and the law. Toronto, ON: Nelson College Indigenous Publishers.

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StudyCorgi. (2020, November 14). Business Law: the Becker v. Pettkus Case. Retrieved from https://studycorgi.com/business-law-the-becker-v-pettkus-case/

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